Answer:
Dunbar Distribution
Opening inventories 2,500 CDs @ $7 = $17,500
Purchases/additions to inventory:
- Mar 5 - 2,000 CDs @ $8 = $16,000
- Mar 13 - 3,500 CDs @ $9 = $31,500
- Mar 21 - 5,000 CDs @ 10$ = $50,000
- Mar 26 - 2,000 CDs @ $11 = $22,000
Total Inventory added 12,500 @ $9.56 = $119,500
A. Cost of Goods available for sale is $119,500 + $17,500 = $137,000
B.i. Closing Inventory is:
<u>Under FIFO Cost Method (If 12,000 units was sold):</u>
Cost of goods available for sale minus (Opening Inventory + item i and ii + 4000 Cds of item iii )
=$137,000 - ($17500+$16,000+$40,000)
=$63,500
<u>Under LIFO Cost Method (If 12,000 units was sold):</u>
Cost of goods available for sale minus (item iv, iii, & ii + 1,500 Cds of item i)
=$137,000 - ($22,000+$50,000+$31,000+12000)
=$22,000
B.ii. Cost of Goods sold is:
<u>Under FIFO Cost Method (If 12,000 units was sold):</u>
Cost of goods sold (Opening Inventory + item i and ii + 4000 Cds of item iii )
=($17500+$16,000+$40,000)
=$73,500
<u>Under LIFO Cost Method (If 12,000 units was sold):</u>
Cost of goods Sold (item iv, iii, & ii + 1,500 Cds of item i)
=($22,000+$50,000+$31,000+12000)
=$115,000
C.i. The FIFO Cost method leaves the Higher inventory Balance in the Balance sheet ($63,500)
C.ii. The LIFO Cost method gives the Higher Cost of goods sold in the Income statement ($115,000)
Explanation:
